When Congress returns from its summer recess after Labor Day, it will
face a decision of potentially landmark proportions concerning private
property rights. Namely, Congress must decide whether to fund the federal
share of the Headwaters Agreement announced last fall that calls for the
setting aside of 7,500 acres of privately owned redwood forest land in
exchange for a cash payment to the property owners.

The agreement, widely hailed by both Democrats and Republicans, is viewed
by many as the last, best hope for saving what some ecologists believe
is one of the most valuable segments of forest ecosystem and habitat for
at least one endangered species. Surprisingly, that agreement is under
attack by the environmental community whose protests now threaten to torpedo
it and to destroy private property rights in the process.

Although brokered by Senator Dianne Feinstein (D-CA), a well-known champion
of environmental protection, the agreement is so constitutionally pristine
- i.e., reflects so perfectly the Fifth Amendment's mandate of just compensation
for the taking of private property for public use -- that it could have
been engineered by James Madison himself. Indeed, Senator Feinstein's
description of the agreement -- as a "win-win" for everyone involved
and "fair and practical," in that it protects both jobs and the
environment - reflects precisely the genius of the Just Compensation Clause.

Clearly the constitutional framers understood that there would be times
when the public need for property would override an individual's fundamental
right to make reasonable and productive use of the land. At the same time,
they also understood that it is the owner of private property who has the
incentive to make it both economically productive and to protect the resources
on it. Indeed, the Headwaters Agreement is a classic case in point. It
would be both short-sighted and economically foolish for Pacific Lumber
to destroy its privately owned forest with no hope of renewal as environmental
groups falsely claim will happen without government intervention.

Nevertheless, the company, Pacific Lumber, is in the business of producing
lumber, and it would have preferred cutting and replanting trees to setting
aside the forest (all other things being equal). But Pacific Lumber has
acquiesced to the environmentalists' demands and the bargain has been struck.
However, as Senator Feinstein also warned, the agreement will only work
if "everyone delivers on their part of the deal," meaning not
only the various governmental parties and Pacific Lumber, but the environmental
community as well.

Having obtained control over 7,500 acres (5,600 from Pacific Lumber,
including the 3,000-acre Headwaters and 425-acre Elk Head Springs virgin
old growth forests), for less than half the full market value of the property,
one would think that the environmental community would be celebrating its
victory. Nothing could be farther from the truth. By taking advantage
of the current identity crisis in Congress, environmental groups are instead
trying to ruin the deal. How else to describe the protests planned for
mid-September in both northern California and Houston, Texas as anything
but a frontal assault on the agreement?

Environmental groups now want 54,400 acres more of Pacific Lumber's land,
even if it means scuttling the comprehensive environmental protection
plan the company is developing for the remainder of its property. Surprisingly,
the environmental groups' new demand for tens of thousands of additional
acres fails to include any payment of just compensation for the additional
land demanded from Pacific Lumber.

No one, of course, disputes the value of the Headwaters forest to both
Pacific Lumber and the environmental groups. The forest is the largest
unentered habitat still in private hands. At the same time, the economic
value of the land in question is enormous. In late 1992/early 1993, the
U.S. Forest Service appraised at $499 million a tract of 4,500 acres (which
included Headwaters but not Elk Head Springs, and was 1,100 acres smaller
than the 5,600 acres included in the Headwaters Agreement); a separate
appraisal of the same 4,500 acres done for the company placed the value
a couple of hundred million dollars higher. Since then, redwood prices
have increased about seventy percent and the acreage to be preserved has
increased nearly twenty-five percent.

Still, for the first time in over a decade in the debate over how to
protect both the public and private interests in the environment, something
remarkable transpired. A deal was struck that both sides can look to with
deep satisfaction. Property would be taken for public use and just compensation
would be paid. It is exactly as James Madison would have wanted it.

-Nancie G. Marzulla is president and chief legal counsel
of Defenders of Property Rights, the only national legal defense foundation
dedicated exclusively to the protection of private property rights, and
has been active in analyzing the impact of proposed state and federal laws
and regulations.